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White House And Senate Reach Deal On ‘Fiscal Cliff’

Three hours shy of midnight, the President and Congress were able to put the framework together for a deal that averts the “fiscal cliff.” According to the Huffington Post, the deal calls for tax rates to rise on all Americans making more than $450,000 per year, a $200,000 threshold higher than the President wanted, an extension on unemployment benefits for another year, and a plan to deal with the other tax rates. It extends the child tax credit and the college tuition credit for five years, individual and business tax extenders for two years, and the Medicare “doc fix” for one year. The Alternative Minimum Tax will be permanently fixed. The agreement also extends the farm bill for one year.

The deal also gives Congress two months to hammer out a plan to reduce spending by more than $100 billion dollars, delaying the sequester. The cost of continuing current spending levels will be paid for through an even mix of tax revenue increases and later spending cuts. While the specifics about the cuts have not been fleshed out, the general framework calls for 50 percent of the cuts to come from defense and the other 50 percent from other programs.

The White House dispatched Vice-President Biden to Capital Hill yesterday in order to mediate between the sides and hammer out a deal. While Democrats are not happy with the framework, sources report that the Vice-President sold it to Senate Majority Leader Harry Reid and House Minority Leader Nancy Pelosi by explaining to them this was the best deal they were going to get.

Senator Charles Schumer said of the deal and the Vice-President’s message:

“The disagreement on this provision and that provision and other provisions are large and wide, but the number of people who believe that we should go over the cliff rather than vote for this is very small. It’s not that this proposal is regarded as great or is loved in any way, but it’s regarded as better than going over the cliff.”

Senator Diane Feinstein said in a statement:

“The argument is that this is the best that we could put together at this time on a bipartisan basis. We need a bipartisan basis to get this done so that means compromises on both sides.”

“The House will honor its commitment to consider the Senate agreement if it is passed. Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members — and the American people — have been able to review the legislation.”